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Apply the rules of natural justice if you want adjudication to count

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legal matters

Preparation for a 'construction law update' lecture inevitably involves an element of retrospection - if only to establish when it was done last time and what has happened since.

Another inevitability is that any update will be dominated by the rapidly burgeoning body of jurisprudence concerning the enforceability of adjudicators' decisions. Of course, one could simply print off a long list of recent cases and tell the hapless delegates about them. But it is difficult enough to keep people interested in the subject matter at the best of times and such an approach would guarantee an afternoon snooze.

Analysing recent developments in adjudication is made more difficult by the number of variables involved. Which contract? Which rules? What dispute? Right answer? Does it matter? Nevertheless, an increasingly common basis on which adjudicators' decisions are challenged is for breach of the rules of natural justice.

At early training sessions for would-be adjudicators, there was much debate among lawyers as to whether the rules of natural justice even applied to adjudication. They queried whether, given the 28-day deadline, parties to the dispute were entitled to have their say on all points. Of course, the lawyers did not have much to go on in those days, but they flagged up the fact that the Housing Grants Construction and Regeneration Act required the adjudicator to take the initiative when ascertaining the facts and the law, which some argued put the procedure beyond the reach of the rules of natural justice.

During a coffee break at one such session, an architect adjudicator asked why non-legal adjudicators should be the least bit concerned as to the jurisprudential basis of the adjudication process. Shouldn't adjudicators simply get on with the job?

At the time, the point seemed unanswerable, particularly as adjudicators were urged to take the dispute by the scruff of the neck and do just that. Several recent cases have turned on this interaction between the adjudicators' power to act on their own initiative and the basic requirements of procedural fairness.

In Glencot Developments v Ben Barrett (2001), for example, the adjudicator was invited to act as mediator during the adjudication. When the mediation was unsuccessful, the adjudicator agreed to resume the adjudication. The adjudicator's decision was challenged on the grounds, not of actual bias, but of potential bias, arising from the confidential information divulged to the adjudicator during the mediation. The judge agreed, concluding that the adjudicator should conduct proceedings in accordance with the rules of natural justice but added, 'or as fairly as the limitations imposed by Parliament permit'.

In Discain v Opecprime (No. 2) (2001), the dissatisfied party complained that the adjudicator had been involved in long phone calls with the other side's representative to which they were not a party: who could say what had gone on?

The judge found that although the phone calls had not been instigated by the adjudicator, dealing with one of the parties in the absence of the other gave rise to a risk of bias. Acting inquisitorially as required by the Act did not mean acting unfairly.

In Balfour Beatty Construction Ltd v Lambeth Council (judgment 12.4.02), the judge decided that, despite the adjudicator's powers to take the initiative in ascertaining the facts and the law, the parties must be given an opportunity to deal with any point or issue that is decisive or of considerable importance to the outcome.

As if that were not enough, the Scottish courts have added their own slant in Karl Construction (Scotland) Ltd v Sweeney Civil Engineering (Scotland) Ltd (judgment 29.1.02), in which they concluded that adjudication is so far removed from the traditional adversarial process that adjudicators were not to be hidebound by the rules of natural justice.

The answer to the earlier question seems to be that the rules of natural justice do apply to adjudication, although in somewhat truncated form as a result of the inquisitorial nature of the process, but that adjudicators should be interested in the requirements for procedural fairness if they want their decisions upheld.

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